Deutsche Bank will pay $16.2 million (Dh59.5m) to settle a US regulator’s allegations that it hired relatives of overseas government officials to win business, making it the latest firm ensnared in a scandal that rocked Wall Street and sparked years-long investigations.
The hiring, which lasted from at least 2006 through 2014 in the Asia Pacific-region and Russia, violated US laws including the Foreign Corrupt Practices Act, the Securities and Exchange Commission said in a Thursday order.
The Frankfurt-based bank agreed to settle the case without admitting or denying wrongdoing, the SEC said.
Deutsche Bank employees created false books and records that concealed corrupt hiring practices, according to the SEC. Individuals who were offered jobs typically bypassed the bank’s highly competitive and merit-based process, which required that they have high educational qualifications and went through several rounds of interviews. One foreign hire who worked in London performed so badly that a human resources employee deemed him “a liability to the reputation of the programme, if not their firm,” the SEC said.
The company agreed to pay a $3m fine and more than $13m disgorgement and interest, an amount that the SEC said reflects its level of co-operation.
“Deutsche Bank provided substantial co-operation to the SEC in its inquiry and has implemented numerous remedial measures to improve the bank’s hiring practices,” bank spokesman Troy Gravitt said in an email statement.
The SEC and US Justice Department in the past decade made enforcing anti-bribery laws a priority, specifically scrutinising how financial firms had awarded internships. The industry-wide investigations were referred to as princeling probes, because they often focused on individuals with connections to the Communist party in China and prominent business people.
Deutsche Bank’s SEC sanction is small when compared with other banks accused of similar misconduct. JP Morgan Chase was penalised about $264m in November 2016, while Credit Suisse Group agreed to pay $77m in July last year. The JP Morgan and Credit Suisse cases also resolved Justice Department allegations.
